How WOW Coin in GC’s Weekly Auction Reveals Hidden Risks in M&A Tech Due Diligence

When one tech company acquires another, a deep technical audit is required. I’ll explain why a target company’s approach to this specific problem can be a major red flag or a green light during an M&A deal.

Recently, I came across an interesting case study—not from a traditional software acquisition, but rather from the world of rare collectibles. A $193,500 coin sale at GC’s weekly auction highlighted critical parallels to what happens when tech companies undergo M&A due diligence. The same principles that drive asset valuation in numismatics mirror how we assess technology stacks during tech acquisitions: transparency, authenticity, provenance, scalability, and long-term sustainability.

The Coin That Tells a Tech Story

In this auction, a historic 1792 H10C was hammered at $193,500. While some bidders raised concerns about the lack of a CAC sticker—an indicator of authenticity and grading consistency—others focused on surface quality and historical significance. Much like code repositories without documentation, certifications, or clear ownership records, this coin raised questions that go beyond price.

In M&A tech due diligence, we see similar patterns. Assets that seem valuable on the surface may hide scalability issues, technical debt, or governance risks. Let’s break down how this auction serves as a metaphor for understanding tech risk in M&A.

What Does the Absence of a CAC Sticker Mean?

• Lack of Verification: Without third-party validation (like CAC), trust becomes subjective—similar to undocumented legacy systems in a startup acquisition.
• Hidden Risks: Surface irregularities (e.g., cleaning marks) suggest interventions that could affect value—like untracked code modifications or undocumented patches in a critical service.

M&A Tech Due Diligence: Same Principles, Different Assets

The core elements of due diligence in both domains revolve around assessing value, risk, and future potential. In technology M&A, these areas include:

• Code Quality Assessment
• Scalability Analysis
• Technology Risk Mapping
• Documentation & Governance Review

1. Code Quality Audit

Just as a numismatist scrutinizes the condition of a coin, an M&A consultant must evaluate the integrity of the codebase. Key indicators include:

• Modularity: Is the codebase well-structured? Are components reusable and isolated?
• Test Coverage: Are there automated tests? What is the test-to-code ratio?
• Language & Framework Consistency: Are modern, supported frameworks used, or are there deprecated dependencies?

Example:

A fintech startup had a promising product but used outdated libraries with known vulnerabilities. During due diligence, we flagged this as a high-risk item. Post-acquisition, replacing those components cost more than initially budgeted for integration.

2. Scalability Assessment

Scalability isn’t just about handling traffic—it’s also about maintaining performance under growth. We examine:

• Infrastructure Design: Is the architecture cloud-native? Can it scale horizontally?
• Data Handling: How efficiently does the system manage increasing data loads?
• Performance Benchmarks: Are there load testing results available? Do they reflect real-world usage?

Red Flag: A SaaS platform with hardcoded database credentials and no auto-scaling mechanisms is akin to a coin that’s been polished excessively—looks good, but structurally compromised.

3. Technology Risk Analysis

This involves identifying threats to business continuity and long-term viability. It includes:

• Dependency Risks: Single points of failure, reliance on deprecated services.
• Security Posture: Vulnerabilities, access control mechanisms, encryption status.
• Vendor Lock-in: Proprietary tools that complicate migration or upgrades.

Example:

We once assessed a logistics SaaS firm whose entire routing engine ran on a third-party API with no backup plan. When the provider deprecated the service, their operations nearly halted—a clear dealbreaker in negotiations.

Lessons from the Auction Floor

Returning to our auction case, several observations align with M&A due diligence best practices:

Transparency Is Non-Negotiable

The absence of a CAC sticker didn’t invalidate the coin’s authenticity, but it raised questions. Similarly, undocumented APIs or missing changelogs signal gaps in a target’s transparency. Buyers need full visibility to assess risk accurately.

Surface Value vs. Long-Term Viability

A shiny coin might catch attention, but if it’s been cleaned improperly, its numismatic value plummets. Likewise, a visually appealing UI doesn’t guarantee a stable backend. Every piece of tech must stand up to scrutiny beyond aesthetics.

Provenance Matters

Coin collectors value provenance—where did it come from, who owned it, and how was it maintained? In tech, this translates to version control history, contributor metadata, and audit trails. These elements provide context and help uncover hidden liabilities.

Practical Checklist for Tech Due Diligence

Here’s a concise checklist I’ve used in dozens of M&A evaluations:

• Repository Integrity: Are all branches documented? Any suspicious commit histories?
• CI/CD Pipeline Status: Is deployment streamlined? How often do builds fail?
• Security Audit Reports: Are recent penetration tests available? Any open CVEs?
• Documentation Coverage: Is there clear documentation for APIs, infrastructure, and processes?
• Licensing Compliance: Are third-party libraries properly licensed? Any GPL conflicts?

Real-World Impact: When a Coin Is More Than a Coin

Let’s imagine two hypothetical startups:

• Startup A: Has a polished product with excellent UX but lacks architectural documentation and uses end-of-life packages.
• Startup B: Has a less flashy interface but excellent code hygiene, extensive comments, regular updates, and robust scalability features.

In an auction-like bidding war, Startup A might win initial interest. But during due diligence, Startup B emerges as the safer, more sustainable pick—just like a coin with provenance and certification over one that looks impressive but lacks supporting evidence.

Conclusion

The parallels between rare coin auctions and tech M&A are deeper than you might think. Both require rigorous evaluation, a keen eye for detail, and the ability to spot hidden risks behind apparent value.

In my experience, the most successful acquisitions are those where due diligence uncovers not just strengths but strategic risks—giving buyers the full picture before they make a move. Whether you’re evaluating a $193K coin or a $19M tech company, the principles remain the same: look beyond the shine, verify the origins, and demand transparency.

For CTOs, VCs, and consultants preparing for M&A, here’s your takeaway:

• Document everything: Clear lineage builds buyer confidence.
• Invest in quality infrastructure: Scalable, secure foundations pay off in negotiations.
• Avoid shortcuts: Technical shortcuts today become expensive liabilities tomorrow.

Because in the end, it’s not about how much something costs—it’s about what it’s really worth.

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